As I’ve given more thought to the recent tax law changes, it has become apparent to me that married couples with a small or no mortgage on their homes will have a difficult time itemizing their deductions starting in 2018. With the standard deduction increasing to $24k in 2018, and the deduction for state and local taxes capped at $10k, a couple would need more than $14k of mortgage interest , charitable donations, and/or medical expenses over 7.5% of their income to itemize.
That means the deduction for charitable donations might be disappearing for many married couples next year. We’ve already been recommending that our clients consider prepaying charitable donations that they would otherwise make in 2018 prior to 12/31/17. Not everyone is comfortable with that strategy, however, as they don’t want to give that much money to a charity all at one time.
People worried about losing this valuable tax deduction who are also in a position to set aside a few years’ worth of donations by 12/31/17 should consider setting up and funding a “charitable donor advised fund” All the money and securities donated are deductible this year based on the value of the items contributed. Plus, if you donate appreciated securities, you avoid paying taxes on the appreciation within the securities. And you then get to control when money is disbursed from your donor advised fund to the charities of your choice.
To find out more about this tax saving benevolent opportunity, check out these following popular options:
- Fidelity Charitable (http://www.fidelitycharitable.org)
- Open Saturday 12/30 and Sunday 12/31
- Vanguard Charitable (https://www.vanguardcharitable.org/)
- Schwab Charitable (https://www.schwabcharitable.org/public/charitable/home)
I hope you find this information helpful.